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Terra Solutions
Gold, refuge value in times of crisis
Gold, refuge value in times of crisis Gold, refuge value in times of crisis

2010.03.22


Terra Solutions - Technical Corner - Case studies - Gold, refuge value in times of crisis

London, the price of gold closed 2009 with one of the biggest annual profits in dollars of the last three decades.

Gold’s history runs parallel to world’s economy evolution. Its easy extraction, its resistance to corrosion and its easy handling properties have made this metal the most precious used by human kind.

The best option to face the crisis
Today, gold presents itself as one of the best financial options. Almost 90% of its world production is destined to official reserve funds of different countries while the remaining 10% is used in jewellery, industry and electronics.

The current crisis has provoked that investment in gold, considered the refuge value and a good asset to posses in times of crisis, to become an interesting investment for investors, operators and banks. In 2009, gold’s quotation closed with an increasing tendency for the ninth year running. It started the year quoting 874 dollars in London’s market and ended it with 1.087 dollars an ounce. In percentages, gold’s quotation increased 26%, compared to the 31% growth registered in 2007. An increasing tendency that many analysts believe will continue the next few years. As regards this precious metal’s production, it changes depending on new reserves and improvements of the production technology.



Worldwide production
Global identified gold reserves at the end of 2005 were estimated in 90 million kilograms, of which, between 15% and 20% would be obtained as a sub product, mainly from copper mining. According to GFMS’s published data in its “Gold Survey 2009”, gold’s annual mining production increased 6% in 2009. Countries like Russia, considered one of the world’s main gold producers, have closed the year with a considerable increase in production that grew annually 12, 2% in the first 11 months of 2009. The Gold Industrial Russian Syndicate is focusing on launching new and enormous projects.

Together with the main producers of this precious metal, there are a group of countries that have contributed to increase the production of gold since 2001; year in which record production of 2.600 tonnes was reached. Ghana and Kazakhstan belong to this group of producers where the extraction companies bet on widening gold reserves and resources.

MAXAM Solutions
In Russia, Ghana and Kazakhstan, MAXAM is present as a strong ally of the main gold extraction companies. In these countries, the industrial group offers its clients a wide range of civil explosives, initiation systems and technical assistance services that adapt to mining operations’ characteristics. Innovative solutions that make gold extraction easier, replacing the traditional explosives used at mining operations.

The advantages of bulk emulsion in Russian mines
In Russia’s case, MAXAM has an emulsion Emulit HEF manufacturing plant in Eruda (central area of the Krasnoyarsk region in Siberia), that operates since November 2008. Its main client in the area is Polyus Gold, leading gold extraction and manufacturing company of the Russian Federation. Since 2009, MAXAM also provides its services to other clients such as the Sovrudnik mine (in Krasnoyarsk) that exploits the “El Dorado” deposit.

"In 2008, Russia produced around 8% of the world’s gold. Before MAXAM began to sell its products, the mines in this area used charged explosives to break the rock. This had a series of inconveniences and disadvantages when compared to using bulk emulsion manufactured on site by MAXAM”, Alfonso López-Pandiella, MAXAM Siberia Technical Manager.

Using the old explosives asked for a great investment in workforce. “It was necessary to unload and stock up the explosives sacks and boxes in magazines, to load them on again for transport to the mines and to finally proceed to charging the shot holes. Using Flexitruck lorries, this whole process is carried out by one person from the vehicle”, López-Pandiella adds. Weather conditions in the region and transporting this explosive made the job that much harder and increased significantly the cost of the final product.

In his opinion, “traditional Russian explosives made with Trilite, are slowly loosing competence due to the increasing cost of the raw materials used to produce them". Since MAXAM started to operate in the zone, the Flexitruck units transported bulk emulsion to each of the mines, to be chemically treated and be pumped into the shot holes.

To this day, MAXAM has supplied over 24.000 tonnes of explosive to the Polyus Gold company that expects a strong increase in the demand of explosives for the next four years. On the other hand, the company Sovrudnik plans to use up to 5.000 tonnes of explosives in 2010 to produce close to two tonnes of gold. To achieve this objective, MAXAM is working on increasing the production capacity of its plant in Eruda. MAXAM’s people in Russia and Siberia are giving a big priority to developing this project, involving all their experts and highly qualified professionals also from other operations (Achinsk, Kovdor…)”, Alfonso López-Pandiella explains.



Blasting leader in Kazakhstan
Kazakhstan occupies the third position among the new independent countries that produce gold. With a privileged surface in resources, there are over 170 gold deposits registered in the country. In terms of volume, MAXAM is the supplier to the country’s two main producers, becoming leader in blasting services for this industry. MAXAM is present in Vasilikovskoye, the largest mine; in Varvarinskoye, and finally, in the Uzboy deposit. The latter, is currently driving its production to position itself as one of the countries key gold producers.

The variety of deposits, their geological features as well as the presence of static and dynamic water flows, requires highly mechanised operations that use more innovative technologies and equipment. In these mines, MAXAM offers the bulk explosive RIOFLEX, he electronic initiation systems RIONEL and the multipliers RIOBOOSTER, to provide a complete service on site thanks to its complete mobile equipments.

At the Uzboy deposit it also provides shot hole drilling services as part of a complete RoG service (Rock on Ground). Also, technical assistance services are being introduced.

In Michael Briggs opinion, MAXAM Kazakhstan’s Manager, the main advantages of the products being used in these deposits are their water resistance, their precision, and the reduction in the risk of failing. “The ultimate technology explosives help drill more precise shot holes that require less explosive for their charge. So, they work better than those that were used before, and help to increase productivity”, MAXAM Kazakhstan’s Manager explains.

Expanding in Africa
Africa has some of the world’s largest gold deposits. A continent where MAXAM is intending to increase its business. “Especially in Western Africa, where exploration has increased 100% since the year 2000”, Emmanuel Ofosu-Asante, MAXAM Ghana’s Manager points out. The group provides its services to this market’s main companies: AngloGold Ashanti in the Iduapriem mine; Chirano Gold Mining Limited, an open pit and underground mine; Central African Gold, now Noble Mining Resources, in the Bibiani mine; LGL Equigold Mine in the Bonikro Mine (Ivory Coat); and, finally, Burkina Faso Mining Company in the Youga Mine (Burkina Faso).

In these operations, MAXAM Ghana offers emulsions (Riomex 7000), ANFO and various booster accessories, detonators and electrical and non electrical initiation systems. Also, technical assistance services in blasting such as designing the blast, charge, connection and detonation. The technical services include the design of the blast, vibration monitoring or smoke qualities, and detonation or fragmentation analysis.

“All the open pit mines use emulsions (RIOMEX 7000) and electrical and non electrical initiation systems. The underground mine uses charged water-gels (Kubela) and ANFO, as well as long retard non electrical initiation systems and electrical detonation systems. In the meantime, production on a low level of opening, use RIOMEX and non electrical or electrical initiation systems”, MAXAM Ghana’s Manager explains. The penultimate third quarter of this fiscal year that ends on the 31st of March, MAXAM Ghana has experimented a very important growth and is expected to grow 15% in the next fiscal year.

A solid future
MAXAM’s projection in the gold market is motivated by its significant increase in demand in the countries where it is currently present. A growth that coincides with the optimistic outlooks of many experts that foresee a “solid” 2010 for this noble metal.

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